15,000 food sector jobs could go without support for suppliers

UP TO 15,000 jobs could be lost from the food sector this year if the Government does not intervene to help suppliers struggling to cope with the weak sterling, according to a leading food industry consultant.

Ciarán Fitzgerald, a former director of Food and Drink Industry Ireland (FDII), said the Government urgently needs to obtain EU approval for a food sector stabilisation fund aimed at food sector companies who can prove that they were financially healthy before the slide in sterling.

The State aid scheme could work on a similar basis to Enterprise Ireland’s €100 million scheme announced by the Minister for Finance in April, he said.

Food suppliers would require capital grants rather than soft loans in order to survive the exchange rate crisis, which is being compounded by uncompetitive energy prices and a plummet in exports to the UK, he said.

The euro was worth about 79 pence at the end of September 2008 but since then it has appreciated about 13 per cent to 89 pence and threatened to reach parity last December. The currency movements have wiped out food exporters’ margins and contributed to the loss of almost 3,000 jobs in the sector since the start of 2009.

Mr Fitzgerald, who now works as an independent consultant, reiterated a recent call by the Ibec-affiliated body FDII that the Government recognise the importance of the food sector to the Irish economy as being on a par to that of the car industry to Germany.

Tesco’s decision to source branded goods directly from the UK in 11 stores near the Border and seek price cuts of up to 20 per cent from Irish suppliers to those stores would be “disastrous” for the indigenous food sector if it was to be replicated across Tesco’s network of Irish stores, Mr Fitzgerald warned.

“We spend €8 billion as consumers and produce €24 billion worth of food. Where’s the economic interest? It’s surely to keep the €24 billion industry going.”